One flew east, one flew west and one went sideways.
When a stock's price moves within a narrow range without any clear trend, investors say the shares are moving sideways.
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Call it a horizontal trend or a consolidation phase, the situation can be make it tough for investors to buy or sell.
Stephen Guilfoyle sees that trend going on right now for the San Francisco fintech SoFi Technologies (SOFI) .
"With the exception of a selloff into earnings and a sharp rally, and then a selloff and then another rally, the shares of SoFi Technologies have more or less traded sideways for almost three months," Guilfoyle wrote in his Feb. 20 TheStreet Pro column. "What gives?"
The veteran trader, whose career dates back to the floor of the New York Stock Exchange in the 1980s, said he'd been adding to his long position of late while "all of my growth names are being slapped around like some kind of thief in the night.”
"Let's explore," he said.
Brian Ach/Getty Images for TechCrunch
Major court case involves Biden loan plan
Well, first there was an important court decision.
A U.S. appeals court ruled on Feb. 18 that former President Joe Biden's administration lacked authority to pursue a student-debt-relief program designed to lower monthly payments for millions of borrowers and speed up loan forgiveness for some, Reuters reported.
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The St. Louis-based U.S. Court of Appeals for the Eighth Circuit sided with seven Republican-led states, which had sued to block the Department of Education's program. The program was already in doubt with President Donald Trump back in the White House.
The three-judge panel held that the Education Department exceeded its authority by trying to use a Higher Education Act provision that allows income-based loan-repayment plans to adopt debt forgiveness on the scale provided by Biden's Saving on a Valuable Education Plan.
L. Steven Grasz, appointed to the Eighth Circuit by Trump during his first term in office, said the Higher Education Act text made clear that Congress authorized only repayment plans that lead to actual repayment of student loans.
The acting undersecretary of education, James Bergeron, told Business Insider in a statement that the “decision is good news for hardworking American taxpayers and the rule of law.”
“The Department of Education is currently working to ensure borrowers understand existing repayment alternatives allowed under the law,” Bergeron said.
The ruling sparked a lot of emotion on social media.
"The SAVE plan wasn't wholesale forgiveness," one person said on X. "It gives people who have been faithfully paying federal student loans w/high interest rates (that can't be refinanced) for more than 20 years an opportunity to finally be finished. Republicans are a**holes."
"Democrats that are now screaming about a “constitutional crisis” are the same ones that encouraged Biden to bypass Congress & forgive student loan debt on his own," another commenter said. "These same people said nothing when Biden ignored the Supreme Court ruling & did it anyway."
Trader: Ruling should be positive for SoFi
The way Guilfoyle sees it, the ruling "should be a positive for a firm like SoFi Technologies, for which student loan originations and refinancings are an important business."
During SoFi's fourth-quarter-earnings call in January, Chief Financial Officer Chris Lapointe said student and home loan lending both had their best quarter since 2021.
Related: Veteran trader takes a fresh look at Sofi Technologies
"Student loan originations were $1.3 billion, up 71% from the same period last year," Lapointe told analysts.
Student loan borrowers have a weighted average income of $134,000 with a weighted average FICO score of 765, he said, referring to the credit scoring model and the name of the company that created it, Fair Isaac.
The federal student loan balance outstanding in the U.S. is $1.693 trillion, according to the Education Data Initiative, with 42.7 million student borrowers having federal loan debt.
Federal student loan debt represents 92.4% of all student loan debt and the average federal student loan debt balance is $38,375.
CEO Anthony Noto said that "2024 was undoubtedly SoFi's best year ever."
"Our ability to consistently deliver durable growth and strong returns was, once again, the direct result of our relentless focus on innovation and brand building," he said.
SoFi beat Wall Street’s expectations for the quarter, but the shares sank on lower-than-expected guidance.
More recently, Guilfoyle said, SoFi announced more than eight new benefits for users of SoFi Plus, offering members more than $1,000 in annual value.
"With the new offerings from SoFi Plus, SoFi has created America's most rewarding financial membership-one that's more than just about products and services," Noto said in a statement. "It's about empowering our members to realize their ambitions."
Guilfoyle weighed the possibility of SoFi’s stock heading into a bearish pattern, or into a period of consolidation.
He decided to add to his position while trimming his share price target to $20 from $23.
Related: Veteran fund manager issues dire S&P 500 warning for 2025
